March 3, 2015

When running a startup (or probably any organisation), it's important to remember that achieving a target or changing a specific metric require certain actions taken by specific people. One way to sanity check if a metric can be met at a specific time is to:

Understand what actions (a new feature, increased marketing etc) are the primary drivers of the metric

Estimate how long it will take to implement that action with a given number of resources

Understand what resources (people with specific knowledge, money etc) are needed to take those actions

If you don't have the resources, how long will it take you to acquire them (hire a new engineer in Sweden = 4.5-6 months with ramp-up time, raise more funding = varies a lot etc)

So even if you know how to increase a key metric, it's as important to understand how long it takes to do the job that will drive the change.

March 1, 2015

I'm using Blogg100 as an excuse to try write a couple of sentences or paragraphs on this blog on a regular basis again. I won't limit the subjects to quite the extent I, at least mentally, have done so far. If I find it interesting to write about, I might just do that.

The annual letter is not quite like a normal, dry annual report and is normally worthy to read (if you're finance or business nerd, at least). This year it was made even more interesting due to the fact that Warren Buffett has been CEO and Chairman of Berkshire Hathaway for 50 years and he and Vice Chairman Charlie Munger looked at the past, present and future of the company and the driver's of success.

While failure and hardship often are better teachers than success, studying organisations or people that have been successful for long periods can also be a good teacher.

While there are many lessons to be learnt from the quotable Warren Buffett, a few basic takeaways for business success, small or large, are:

Find something you like (or even love) doing and can do for a long time. That will have a major impact on your happiness.

Skill and knowledge accumulate over time (but I'd add, in the words of Steve Jobs, that one must remember to "stay foolish").

Networks and relationships grows too, opening up new opportunities.

Understanding what you're good at and understand (your circle of competence) is very valuable.

October 26, 2014

An old, I cannot find the date but guess early 2000's, Harvard Business School interview with Tom Murphy (ex-CEO of Capital Cities that's now part of Disney). Some very good food for thought around building a company in no particular order: 1) management running the company like owners for the long-term, 2) responsibility to employees, customers and shareholders, 3) hire smart people and give them responsibility and share of the financial upside, 4) never do improper or unethical things, 5) care about costs, 6) be in a good business.

October 25, 2014

I don't think the title angel investor is a helpful or accurate way to describe early investors in startups. Capital is crucial for all companies, but individuals and funds that invest in startups aren't angels. There are many good reasons that drive people to invest that aren't captured by standard financial return calculations, like paying it forward, learning new stuff, building relationships and making the place you live and work in more interesting. But angel? I think not.

Anyone who makes a little or a lot of money from a startup should do whatever she wants with it. Spend it on alcohol, men and fast cars. Or just squander it by paying off debts, making a downpayment on a mortgage, investing in the stock market or buying a well-deserved vacation.[1]

But if there's some capital left after personal needs are taken care of, a fundamentally good ethos in the startup world is paying it forward and investing in new companies. Recycling capital, as Fred Wilson puts it.[2] But even more valuable than only investing capital is to also help a startup with relationships, experience and maybe even some wisdom.

Investing and advising can be very rewarding both mentally and emotionally in the short-term, and if you're lucky financially in the long-term (startup investing is veryslowmoney). But just because an investment isn't entirely captured by a traditional valuation model and is personally rewarding doesn't make anyone an angel, just a mensch.[3]